The cryptocurrency market is experiencing a significant downturn, with altcoins taking a sharp hit while Bitcoin remains relatively stable. Despite Bitcoin trading below $66,000, altcoins have suffered substantial losses, erasing gains from the March rally. The market sentiment remains bearish, with calls for an “altcoin season” dwindling.
Several factors are contributing to this bearish trend, according to market analyst and MN Trading founder Michaël van de Poppe. Ethereum, the leading altcoin by market cap, has fallen 5% in the past week and had a volatile period last month. The delay in listing Ethereum exchange-traded funds (ETFs), despite their approval, has created uncertainty, exacerbating market instability.
Meanwhile, Bloomberg analysts anticipate a potential boost if these ETFs launch on July 2, potentially reclassifying Ethereum as a commodity rather than a security. This could lead to increased investor interest in altcoins.
Van de Poppe also points to macroeconomic factors such as high inflation and U.S. economic data that hinder the Federal Reserve from reducing interest rates. Historically, altcoins perform well during periods of quantitative easing and low interest rates, when global liquidity is abundant. The current environment of high rates and tighter liquidity adversely impacts risk-on assets like cryptocurrencies.
Moreover, Bitcoin’s dominance in the market, currently at 55.4%, further underscores the pressure on altcoins. This dominance has been on the rise since December, suggesting a stronger preference for Bitcoin over other cryptocurrencies. Some analysts believe this trend may reverse with the potential listing of the Ethereum ETF, leading to increased investor interest in altcoins.
Crypto trader ‘cyclop’ noted that altcoins have historically peaked 546 days post-halving, suggesting that a buying opportunity might be imminent before a potential parabolic rise. However, the overall altcoin season index has dropped from 80 to 31 over the past six months, reflecting a bearish sentiment.
Despite these challenges, some experts expect a market reversal, driven by the anticipated Ethereum ETF listing. Currently, Bitcoin remains within a range-bound channel, while altcoins continue to decline. For a true altcoin season to commence, a significant downtrend in Bitcoin dominance would be necessary, allowing altcoins to outperform.
As the market navigates these uncertain waters, all eyes are on the upcoming developments, particularly the Ethereum ETF. It could catalyze renewed optimism and potential recovery in the altcoin sector.
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Source: NewsCrypto
